What are MM’s thoughts on Sims Ltd?

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Question asked 08/04/2022

What are MM’s thoughts on Sims Ltd?

Hi James, I continue to learn much from your daily emails - thank you. I'd be interested in hearing your current thoughts on SGM. You mention this stock every now and then. Would you see the fundamentals of SGM to be such that it is a sound long term hold, or would you see it more as a candidate to sell into strength over the course of the next month?

Answer

Hi Tracy,

Sims (SGM) has obviously enjoyed a great post COVID rally being correlated to 2 “hot areas” for the ASX i.e. the Materials and ESG space. The metal and electronics recycling company delivered an excellent earnings report in February which showed revenue up 74% and NPAT of $253mn. The companies major increase in revenue was from the combined tailwinds of higher sales and material prices as inflation takes hold – their margins increased by an amazing 45%.

We are definitely a fan of SGM as the macro backdrop provides the ideal playing field for the business – our ideal entry level is under $20, or around 5% lower i.e. it wouldn’t be top of our list to sell into strength if we were long today.

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Sims (SGM)

LAST UPDATED 08/04/2022 16:33

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